Gallons of milk in the dairy products section can be seen on Display at a new Wal-Mart store in Chicago, January 24, 2012.
Reuters/John Gress

Woolworths and Coles have announced a temporary milk levy to help farmers affected by drought. On Thursday, the supermarket giants said they will increase their milk prices by 10 percent, promising the extra money they would receive would go to Australian farmers.

Woolworths was the first to announce its plans, saying it would introduce a special range of drought relief milk at $1.10 per litre from mid-October. It would also hike its 3L Full Cream and Lite Milk prices from $3 to $3.30 in Queensland, New South Wales, Australian Capital Territory and Victoria until the new drought relief milk range hits shelves. It will work with its brand fresh milk suppliers who source milk from drought-affected regions to set up a drought relief oversight committee that would ensure that the 10 percent per litre paid to suppliers would go to the farmers.

“There’s no doubt many dairy farmers are doing it tough in the face of the drought and we’re keen to support them through this difficult time,” Paul Harker, Woolworths Director of Fresh Food, said. “Many of our customers have told us they want to help and are willing to pay more for their milk to do so.

“This new range of drought relief milk will provide customers with that choice, safe in the knowledge the extra money will flow through to dairy farmers in drought-affected areas.”

He added that while the 10 cent per litre extra for the farmers wouldn’t solve their problems as Woolworths-branded milk account for less than five percent of the country’s total milk production, it would still help in the easing of some of the immediate pressure brought on by drought.

The remaining cattle on farmer May McKeown's drought-affected property, located on the outskirts of the northwestern New South Wales town of Walgett in Australia, eat hay July 20, 2018. Picture taken July 20, 2018. Reuters/David Gray

Hours after Woolworths’ announcement, Coles followed suit. It said it would also increase its 3L Own Brand milk from $3 to $3.30 in all states from Thursday until the end of the year. The 10 per cent increase will be donated to the National Farmers’ Federation’s 2018 Drought Relief Fund. Coles has partnered with NFF since 2012 to support local farmers.

It said that it had already committed almost $12 million to drought relief, including $5 million from its Coles Nurture Fund, also to assist the farmers. The milk price increase is its latest effort to help dairy farmers in this time of drought.